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Matters Risk? The Allocation of Government Subsidies for Remediation of Contaminated Sites under the Local Investment Programme

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Author Info

  • Forslund, Johanna

    ()
    (National Institute of Economic Research)

  • Samakovlis, Eva

    ()
    (National Institute of Economic Research)

  • Vredin Johansson, Maria

    (Department of Economics Uppsala University)

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    Abstract

    In this paper we evaluate how the environmental and health risks posed by a contaminated site affected the probability that it would receive funding for remedial action under a Swedish subsidization scheme, the Local Investment Programme (LIP). The LIP, effective between 1998 and 2002, had a twofold purpose: to step up the pace at which Sweden becomes an ecologically sustainable society and to reduce unemployment. Under the LIP, almost € 43 million (SEK 400 million) were granted to various municipal projects aimed at remediation of contaminated sites. In analyzing data on both subsidized and non-subsidized remediation projects, we unexpectedly find that the more hazardous a site, the less the probability of its receiving funding. Thus, contrary to the “worst things first” strategy officially adopted by the Swedish Parliament for remediation of contaminated sites, our results reveal a risk-avoiding allocation of government subsidies. Furthermore, the number of employment opportunities generated by remediation projects positively affects the probability of receiving a LIP subsidy. Although more faithful observance of the official strategy would have been desirable, the most highly contaminated sites at least received the most money. Based on our findings, we believe that extensive information about the hazards posed by contaminated sites is necessary to ensure better decisions on remediation funding and more efficient use of public resources in the future.

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    Bibliographic Info

    Paper provided by National Institute of Economic Research in its series Working Paper with number 94.

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    Length: 34 pages
    Date of creation: 01 Apr 2006
    Date of revision:
    Handle: RePEc:hhs:nierwp:0094

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    1. Gayer, Ted & Kip Viscusi, W., 2002. "Housing price responses to newspaper publicity of hazardous waste sites," Resource and Energy Economics, Elsevier, vol. 24(1-2), pages 33-51, February.
    2. Eriksson, Kimmo & Karlander, Johan & Öller, Lars-Erik, 1996. "Hierarchical Assignments: Stability and Fairness," Working Paper 50, National Institute of Economic Research.
    3. Cropper, Maureen L. & William N. Evans & Stephen J. Berard & Maria M. Ducla-Soares & Paul R. Portney, 1992. "The Determinants of Pesticide Regulation: A Statistical Analysis of EPA Decision Making," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 175-97, February.
    4. repec:cdl:agrebk:1143723 is not listed on IDEAS
    5. Huhtala, Anni & Samakovlis, Eva, 2003. "Green Accounting, Air Pollution and Health," Working Paper 82, National Institute of Economic Research.
    6. Barot, Bharat & Yang, Zan, 2002. "House Prices and Housing Investment in Sweden and the United Kingdom: Econometric Analysis for the Period 1970-1998," Working Paper 80, National Institute of Economic Research.
    7. Ahlroth, Sofia & Bjorklund, Anders & Forslund, Anders, 1997. "The Output of the Swedish Education Sector," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(1), pages 89-104, March.
    8. Arai, Mahmood & Heyman, Fredrik, 2000. "Permanent and Temporary Labour: Job and Worker Flows in Sweden, 1989-1998," Working Paper 71, National Institute of Economic Research.
    9. McCluskey, Jill & Rausser, Gordon C., 2000. "Hazardous waste sites and housing appreciation rates," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0z9156qx, Department of Agricultural & Resource Economics, UC Berkeley.
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